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Market speculation of a tie-up has centred on the Singapore Exchange, as well as Deutsche Börse, and the New York Stock Exchange, which have similar business models to the ASX.

“There is an ongoing process of discussions with other exchanges and we continue to evaluate our options," ASX spokesman Matthew Gibbs said.

Shares in the ASX climbed more than 10 per cent from $30.70 on September 20 to $33.79 on September 27, before falling back to close at $33.52 yesterday. More than 2.8 million shares change hands on Monday, the most in two and a half years.

The Australian Securities and Investments Commission had been monitoring the trading and would have formally asked the ASX to explain if the exchange had not voluntarily issued a statement yesterday.

ASX chief executive
Robert Elstone
has made no secret of the fact that he would consider linking up with rival exchanges. Delivering the firm’s annual results in August, he said there were “certain exchanges out there that prima facie it could make some sense for us to co-operate with or combine with".

The ASX, which merged with the Sydney Futures Exchange in 2006, had previously been linked with the Toronto Stock Exchange and the London Stock Exchange before the financial crisis put paid to any potential deal. More recently the focus has been on groups like the Singapore Exchange, which like the ASX has an integrated business model, offering share trading as well as settlement and clearing services. Deutsche Börse and NYSE also operate similar businesses.

Analysts say the US Nasdaq Stock Exchange could be another option given it runs the same technology platform as the ASX, while the Chicago Mercantile Exchange and the Hong Kong Stock Exchange are also mentioned as possible alternatives.

“The ASX has ongoing discussions and evaluates its options as an ongoing process," Mr Gibbs said. “None of those discussions has led to anything that is disclosable."

Pressure for consolidation among the world’s major exchanges has been building as they are forced to spend up big on technology to combat competition from a new generation of electronic stock trading platforms, which specialise in high frequency computer generated share trades.

Chi-X, an electronic sharemarket operator backed by Japanese broking house Nomura, has applied for a licence to move into Australia, turning up the heat on the ASX.

The stakes are high for the ASX as it was forced by the government to hand over its role as market supervisor to ASIC in August, adding extra incentive to protect its share trading business from competitors.

The exchange is spending up to $35 million to build a new technology data centre and has slashed its headline trading fees in half in a bid to head off competitors.

If rival stock exchanges are successful, UBS analyst Chris Williams has estimated the ASX is in danger of losing as much as half its revenue from share trading within five years.

“I wouldn’t discount that some time in the distant future they would be looking to do something [with a rival exchange]," he said.

In its statement to the market yesterday, the ASX said trading activity was “strengthening", which may have contributed to its recent share price gains. In the first three months of the 2011 financial year, trading in stock options has increased by 7 per cent, while futures market activity was up 36 per cent, the ASX said.

Delays around the approval process for Chi-x’s licence application due to the changing political landscape in Canberra may also have boosted the ASX. The final decision will rest with the new parliamentary secretary to the treasurer
David Bradbury
after former Financial Services minister Chris Bowen was promoted to Minister for Immigration after the federal election.